TELF AG analyzes US growth in the battery sector
New initiatives
Over the past few years, the United States seems to have definitively recognized the importance of lithium in the great global process of energy transition. Washington is supporting national battery producers and promotes the development of sourcing projects focused on this precious resource, now universally recognized as one of the main levers to trigger ecological conversion.
A few days ago, the Washington government gave its green light to develop a lithium and boron deposit in Nevada. The mine in question is Rhyolite Ridge, which by 2028 would have the potential to quadruple the production of lithium from American soil. The resource will be procured on-site, and according to some estimates, it could contribute to producing as many as 370,000 electric vehicles each year. The only operating lithium mine in the United States is Silver Peak, while another site, Thacker Pass, is currently under development (also this last project will also have a refining plant). The excitement around the lithium and battery sectors is also well demonstrated by the green light received a few days ago for the construction of the first Gigafactory in the world specialized in lithium-sulfur batteries, one of the many families of innovative batteries that are trying to fit into the global dynamics of the sector. Also, the sulfur would be sourced directly from American soil in this case.
The role of government support
This industrial and productive vitality cannot be explained solely by the global advance of the energy transition, which places an increasingly accentuated emphasis on some strategic resources such as lithium but is also closely linked to specific government initiatives aimed at supporting national producers in the sector. One of these is undoubtedly the Inflation Reduction Act (Ira), which, thanks to a series of incentives, is helping notably reduce battery production costs in the USA. According to estimates by Benchmark Mineral Intelligence, by the end of the decade, the production cost for US producers could reach around 76.8 dollars per kWh. The IRA also includes a series of incentives for those who purchase an electric vehicle assembled in North America, demonstrating having at least 50% of raw materials sourced and processed in American territory (after 2026, this percentage will rise to 80%). It is no coincidence that since 2022, the year the IRA was introduced, proposals have been made to build 23 new gigafactories, with consequent increases in the planned production capacity by 2030 (which would have risen to around 1,290 GWh, according to Benchmark Mineral Intelligence).
Except for China, where other similar government support initiatives for battery producers have been undertaken, the rest of the world is not seeing a similar level of government support for this type of production. In Europe, where the potential of batteries and electric vehicles has already been widely understood, aid to the sector has been less substantial and generally more complex to obtain than the initiatives put in place by the US administration. This situation in the European region is also well demonstrated by the slowdown in the construction of gigafactories and other similar plants for the production of batteries, despite the European industry in the sector having already received around 20 billion in aid from public funds.
